The “Rules of Retirement”

Posted on December 30, 2011 by admin

Retirement accounts are not what many people expected they would be in light of the global recession. What’s in them isn’t the only factor to consider, however; it’s important to understand who is entitled to your assets. According to New York State CPA, Ed Slott, retirement accounts and 401ks are “surrounded by a complex labyrinth of rules,” that make it very difficult to know who exactly they will be passed down to in the event of a death.

And according to Edwin Worrow III, a lawyer in Ohio, the “patchwork of federal and state laws governing these plans are partly to blame, even the best attorneys and accountants are bedeviled by it.”  There are, however, some basic rules that financial professionals usually follow in order to help families understand what happens to retirement accounts in the event of a death.

Rule number 1:  your spouse has priority; if he or she is the beneficiary on your account, he or she will inherit your retirement account regardless of anyone else included in the will.  Rule number 2: if you’re not married at the time of your death, your retirement account and 401k plan will be passed down to your designated beneficiary, regardless of non-contractual agreements. Rule number 3: IRAs, which are subject to state laws, can be passed to anyone you list as a beneficiary, with or without your spouse’s consent.  Finally, rule number 4: you do not need your spouse’s consent to cash out a 401k or roll it into an IRA if you change jobs or retire.

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World’s Richest Cat Can’t be “Trusted”

Posted on December 20, 2011 by admin

According to an article in The Guardian, “Tommaso, a four-year-old, one-time stray from Rome, is thought to have become the world’s richest cat.”  We’ve seen cases like this before, but unlike Massachusetts, which allows residents to establish trusts for their pets before and after death, Italy does not. So in the case of Tommaso, the signora had to leave her pet and his inheritance to a beneficiary, one Stefania, a “fellow cat-lover.”

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“Inheriting a Home, and a Loan”

Posted on November 23, 2011 by admin

We’ve discussed estate taxes quite a bit on this blog, because it can be a contentious and politicized topic; but while the word “inheritance” has a wealthy ring to it, most bequests come with strings attached. Estate taxes and  the ways to “avoid” them are applicable to the minority. According to the Census Bureau, for example, 31 percent of people 65 and up are still paying home mortgages. When your relative or partner leaves a property for you in his or her will, you are responsible for unpaid mortgage payments. For many people, a bequest of property is a financial burden.

In the current housing market, an additional home can mean financial stress. If the home you’ve been left is valuable, the stress of selling isn’t only financial but emotional. Sometimes people want to hang on to a their parents’ home because they grew up in it, or because they think it will be worth much more in a future market.

If  you’ve been bequeathed a home “free and clear,” the executor of the will is required to sell stocks, bonds and / or assets to pay off the mortgage. This detail must be written into the will. Another detail grieving relatives might not consider is late mortgage payments. If the deceased was very ill, it’s possible the mortgage was unpaid for up to 90 days, making the home a candidate for foreclosure.

Scenarios like these are not uncommon and require the care and instruction of an estate planning lawyer. Each property is different as is each will, so it is important to understand how to address problems should they arise. The preventative measure of creating a detailed will benefits all parties.

Link to full article.

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National Estate Planning Awareness : Pass it On

Posted on October 18, 2011 by admin

Over the course of this blog I’ve advocated for immediate design of an estate plan under the advisement of an estate planning lawyer like me. As this is National Estate Planning Week, it’s only fitting that I should make another attempt at getting the word out to Fields and Dennis blog readers: please create an estate plan as soon as possible.

Estate planning in Massachusetts is not reserved for your grandparents or parents, it’s for everyone. If you have properties, especially if you have or are expecting children, then you should have a comprehensive estate plan set up.

A recent article in the Wall Street Journal lists a few simple tips for various age groups; for example, if you’re over 18 years, you have the right to a power of attorney for your finances, health and medical care, and to designate beneficiaries including siblings, parents or a charity of your choice.

If you’re in a partnership but not legally married, you should also make an estate plan, else wise your partner may not receive your properties after death, as they would be passed on to next of kin by law.

If you’re married, your partner will receive your assets in the case of death, and without a tax burden. It’s beneficial in this case to draft a life insurance plan to ensure all properties are properly dispersed.

If you have children, if you’re a senior, or if you’re wealthy, an estate plan is absolutely essential. While these are the types of people who usually think they should plan their estates, it’s the aforementioned types who we’re trying to reach out to.

In the vein of Estate Planning Awareness, I ask you to pass this information on to your friends and family! Please contact us if you have any questions. Thank you.

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Another Estate Tax Deadline Looming

Posted on October 12, 2011 by admin

By November 15, 2011, an important estate planning decision must be reached: either opt to have the imposed federal estate tax rate reached last year by President Obama and Congressional Republicans, or opt out. If you opt-in, then assets on your estate are subject to a 35% tax rate after the first 5 million dollars; if you opt-out, your subject to the unknown. Before the agreement was made, the terms stated an exemption on the first 1 million dollars, after which assets were subject to a 55% tax rate. But according to the New York Times article, here, it’s not quite as simple as that.

If your properties are worth millions, it might be worth your time to look at the current federal estate tax in political and historical context, in addition to the usual estate planning. Allocations to heirs, beneficiaries, and other functions of estate planning are impacted by this decision. And while it seems beneficial to wealthy families by the numbers, the process will be extremely cumbersome. Estate planning is a complex state of personal affairs, and the 2011-2012 federal agreement makes it even more challenging. There are, however, people who will enjoy the perceived benefits with the assistance of an experienced estate planning attorney.

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News Update: Trusts for Pets

Posted on September 16, 2011 by admin

Effective April 7, 2011, residents of Massachusetts may now establish pet trusts to care for one or more animals, living during the settlor’s lifetime.

This trust now allows individuals to plan for and take care of their pets not only during their lifetime but also after their death.  The court does retain the right to reduce the amount left in trust for the care of a pet if the court finds that, “the amount substantially exceeds the amount required for the intended use and the court finds that there will be no substantial adverse impact in the care, maintenance, health or appearance of the animal or animals.”

Let’s all remember Lenora Helmsley and $12,000,000 trust established to care for her Maltese, Trouble.  This is not a method to be used to keep your money from your heirs but is meant to ensure that your animals are taken care of after your death.  It is a wonderful estate planning tool now available to residents of Massachsuetts.

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Room to Grow, Your Right to Know: HIPAA and HCPOA Forms

Posted on August 1, 2011 by admin

Our children are growing up in so many ways: they’re going off to college or into the work force, where they will gain valuable life skills and learn important lessons. Most of them are also going become adults, by which I mean, they’ll be 18.  While your children may be slipping into their future without much help (save tuition expenses) from Mom and Dad or a legal guardian, they are still, very much, in your care. All parents need to know about the Health Insurance Portability and Accountability Act (commonly known as HIPAA).

Under this act, when your child attains the age of 18, he or she is legally recognized as an adult.  From that time forward, college medical centers and indeed, all medical practitioners, facilities and hospitals, are prohibited from releasing his or her medical information to you. While you might think you want to give your child more space and privacy as he or she grows into adulthood, you may also want to be privy to his or her health challenges.

In order for medical information to be shared with you, your child must sign a HIPAA Release along with a Health Care Power of Attorney (HCPOA) appointing you as health care proxy. These documents will not only facilitate the release of otherwise private information regarding your child’s health, it will allow you to make or assist your child in making informed decisions based on past medical history which he or she may not remember (whooping cough at five). An important detail to remember when creating a HCPOA for your child, is to use the form, if any, mandated by the state where your child is domiciled, and not the state where he or she is attending college.  Even if you’re looking forward to some time without the kids, you also want to make sure they’re healthy and safe!

The article is featured here.

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The importance of being earnest (when designating beneficiaries)

Posted on July 14, 2011 by admin

No one likes to make a will and people constantly put it off, but one thing that should never be put off is designating beneficiaries.  Not only should beneficiaries be named carefully, they should also periodically be reviewed, verified and possibly updated.

Many financial institutions require that you name a beneficiary, so the institution you work with can pass on your property to the appropriately designated recipient.  If things in your life haven’t changed over time, your original beneficiary will probably be retained; however, life changes, such as births, deaths, adoptions, and divorces, may require you to assign a different or additional beneficiary.

If a divorce has occurred and a QDRO has been prepared to divide a 401K or 403B, it is imperative that the beneficiary designation be changed once the QDRO has been accepted by the plan.  Without this change, it is possible that a former spouse, not entitled to a portion of the decease’s retained retirement plan could remain the beneficiary and receive not only their designated portion but also the portion retained by the former spouse.  This can and has led to lengthy and expensive litigation.

Changing circumstances often cause beneficiary pay outs to go to people with substance abuse problems or other issues.  It is important to periodically update beneficiaries, especially during the estate planning process, to make sure they match the will, and also that the designated beneficiary is still the person that you want to inherit your property.

The full article can be seen here.

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Should my elderly parent, in a nursing home, sell her house?

Posted on June 30, 2011 by admin

One of the most common questions surrounding estate planning for the elderly is what to do with their home and other assets after one or both have entered a nursing home. The children of elderly parents are constantly asking estate planning attorneys in Massachusetts if their parent’s home and assets are protected when the parent or parents enter a nursing home and how their assets will affect their ability to qualify for Medicaid.

These questions are very important when older/elderly individuals review or begin the estate planning process, particularly when it pertains to Medicaid.  For the purposes of Medicaid eligibility, the primary home of a parent in a nursing home will not count as an asset under the following circumstances: the parent might return to the house to live; he or she has a spouse who is not living in a nursing home (community spouse); if the home is occupied by a child who is under 21 or handicapped; or if a child has resided in the home for at least two years and provided care for the parent which has allowed the parent to remain in the home.

As for other assets such as investment accounts, IRA’s, bank accounts, etc., in order to qualify for Medicaid, the “countable assets” such as those just listed, must be under $2,000.00.  This can be accomplished by converting the assets to exempt assets by way of sale or transfer.

Applying and qualifying for Medicaid can be a lengthy and stressful process.  An elder law attorney or estate planning lawyer experienced with the application and appeal process will be able to guide you through the maze of state and federal regulations associated with the process.

The full article can be seen here.

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Elder Care and Consideration

Posted on June 20, 2011 by admin

The process of watching elderly parents age before your eyes is an emotional and challenging experience and for members of the “sandwich” generation, a duty to balance the care for their children and their parents can be a difficult job.  This responsibility can be escalated if there are serious health or financial issues involved.  The process of caring for elderly parents usually begins with the onset of an illness or injury suddenly striking the parent, at which time the child becomes the primary caregiver for the parent and has to make decisions about the parent’s well being.

For many people, this process begins in a hurried manner when something suddenly happens to the parent and the children have to play catch up.  The best way to avoid this situation is to contact a trusted estate planning attorney and devise a plan while the older parents are healthy and have a say in the decision making process.  Older parents always value their independence and may resist the need to prepare and estate plan, but sooner or later they will realize that having a specific plan in place is far better and less stressful for everyone involved.

It is no secret that the earlier in life estate planning takes place, the better it is for everyone and yet a recent study published by John Hancock found that 69% of those who responded to the survey had done little or no planning for long term care.  There are many options for effective estate planning including long term care insurance, wills, powers of attorney for financial matters, health care directives, and the creation of various types of trusts.  These options are best discussed with an experienced estate planning attorney who can help you decide which option is best for all involved.

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